by Venturans for Efficient & Responsible Government (VREG)
When it comes to real estate, Ventura’s City Council is, at best, inconsistent. At worst, they are reckless with our money. Their latest decision costs taxpayers over $1,000,000.
On June 16th, the Council accepted the city staff’s recommendations for the Harbor Church. Like some other real estate recommendations, it loses money.
Nothing About This Deal Adds Up
The city paid church officials $2,300,000 to buy the Harbor Church property in 2016. City Hall and Harbor Church agreed the value of both the land and the church building was $1.6 million. The actual sales price included an additional $700,000 to pay the Church to move. By any measure, Ventura overpaid for the property.
City staff proposes to demolish the church, subdivide the property and sell the lots. Total cost to the taxpayers to clear the lot will be $2,670,000.
Purchase Harbor Church Building $1,600,000
Moving Expense $700,000
Demolish Church Building $350,000
Remove Hazardous Material $20,000
The city staff enthusiastically reported the value of the property on which the Harbor Church sits increased by 66% since 2016. They believe we can get four lots on the existing site. They estimate each lot will sell for between $250,000 and $375,000.
The arithmetic didn’t add up from the beginning. A staff report lists the property and building appraisal at $1,350,000 in July 2017. A year earlier, the city paid $1,600,000 for the church and the lot—$250,000 more than the appraised value. This transaction lost money from the very start and doesn’t begin to realize the gains from the purported 66% increase in land value.
Something Else Doesn’t Add Up Either
The city staff used an optimistically over-valued selling price for the lots.
We pulled data from a local title company for homes sold in zip code 93003 for the past two years. What we discovered was shocking.
|Average||Median||Avg SF||$/SF||# Sales|
|2016||$ 628,321||$ 595,000||1619||388||184|
|2017||$ 633,269||$ 599,000||1700||372||322|
|2018||$ 593,415||$ 594,000||1747||340||179|
According to the data, lots on Harbor Church’s corner should sell for between $215,000 and $233,000. The market values the lots are well below the $250,000 to $375,000 the city staff believes they’re worth.
A More Realistic Calculation Of The Transaction
Using this realistic data from the title company and giving the city the higher anticipated value, the sale of the property would actually look something like this:
- Sell Four Lots ($233,000 each) $932,000
- Lease Payments From Harbor
- Church For 12 months $36,000
- Realtor’s Fee (6%) ($55,920)
- Total Revenue $912,080
- Total Costs (from above) ($2,670,000)
- Total Loss on Transaction ($1,757,920)
Is The City Looking Out For Your Money In These Real Estate Transactions?
The City Council’s inconsistent real estate decisions should concern citizens. It causes taxpayers to doubt their financial acumen. The Council trusted the city staff again, with the same disastrous, money-losing results. One wonders whether they are good custodians of our tax money.
We believe the city should get out of the real estate business. The litany of poor decisions grows—the WAV Building, Brooks Institute lease, 505 Poli and the Harbor Church property.
At the very least, the city should seek advice from licensed realtors and experts whenever making a real estate decision.
Large financial decisions deserve scrutiny. It’s best to proceed with caution and with thought. It’s too easy for city staff to recommend spending taxpayer money on losing projects. We urge the City Council to approach each real estate transaction with skepticism. Treat the money as if it was coming out of their own pockets.